Carl Icahn Discloses 'Large Position' in Apple, Believes Company is 'Extremely Undervalued'

[GfPQqmcRKUvP]

Exactly, he's a vulture. In the Dell case, he steps in and runs up costs of the transfer yhat was a "done deal" millions of dollars. He is costing REAL PEOPLE their jobs while he holds the company hostage for 4% more.

But he's obviously not acting alone as most of the money in these deals is from pals and not HIS. He's just the face of a band of stock thuggies and its Apple's turn to get screwed with.

Apple probably wishes somebody else would be the new "belle at the ball" for a while so they can do business. Diverting Tim's time to deal with invented investor revolts is just going to hurt things overall. The problem with being "king of the hill" is that you start to spend too much time fighting off others. Guys like Gates and Ellison enjoy that kind of game.. Steve Jobs pretty obviously hated that game and just wanted to focus on going UP, not who's behind you.

This is absolutely absurd and you have no idea what you're talking about. Are you forgetting that the point of a business is to enrich its owners? Dell and Silverlake came up with a bid that was a bad deal for shareholders so Icahn stepped in and caused a fuss. The bid has now been raised by more than a "couple million". Run up the costs of the transfer? He got a better deal for the shareholders (all of them, not just his personal stake), whereas all/most of the benefit would have gone to Dell and Silverlake before!

My god people. I don't go into the photography forums and speak as if I'm some authority on different camera lenses and I'd expect the same courtesy when you know nothing about finance.

 

[IJ Reilly]

I think it's highly likely that they'll go private... How long before their profits allow them to just write a check for the whole public float of the company? (I know it's not that simple... most of their cash is overseas... but still, the assets are there. Could be the biggest going private transaction of all time.)

Not a chance in this life, or the next one. What you are begging for in actuality is Apple becoming such a troubled company that going private is the only way to save it. Recent examples: Dell, Chrysler. It's typically a choice between going private or bankruptcy. In short, an absolutely terrible direction for a thriving company.

 

[fallbrook]

I predict that Icahn will eventually drive Apple down the toilet, should he be interested enough (Dell, anyone?)(Or TWA). Right now he's just manipulating the stock by buying low and demanding that Apple take measures to raise the stock price, thus generating him a nice fat stack of cash. I expect him to pressure Apple to deplete most of it's cash reserves to drive stock price, just long enough for him to cash in big. With each buyback of non voting stock, Icahn will gain more control too. He's exactly the kind of investor you don't want -- the opposite of Buffet, per se. This is the same ******* that wanted to clear Apple's management in 2009. The same ******* that wanted Apple to sell ****** devices at discount retail chains. What he did with TWA was downright ******.

I agree with your general sentiment regarding activist shareholders, but how many shares would Icahn need to purchase/influence in order to start making decisions? Even at a billion dollars in shares... that's still only 2/10 of a percent of the public float, no?

 

[Tysknaden]

He will bury Apple...

- after breaking out the gold teeth.

 

[fallbrook]

Not a chance in this life, or the next one. What you are begging for in actuality is Apple becoming such a troubled company that going private is the only way to save it. Recent examples: Dell, Chrysler. It's typically a choice between going private or bankruptcy. In short, an absolutely terrible direction for a thriving company.

Actually... I don't recall "begging" for anything. As a common stock holder, I would prefer they stay public in perpetuity. But if I'm sitting on the board, and I have half a clue as to what I'm managing, I'm thinking that the ridiculous scrutiny of Wall Street is holding back the company's growth. I'm also looking at an ever increasing stock pile of cash...

Company's go public so they can get access to capital. Apple no longer has such needs... the only reason they're accessing capital through debt is so they can become less of a public company.

Lastly, to suggest that Dell or Chrysler are analogous to Apple is just silly... Dell is struggling because their business model leaves them wide open to competitive pressures. Chrysler is struggling because their cars lack appeal and have for decades. Neither company has engendered any considerable brand loyalty. Apple is the antithesis of these examples.

 

[IJ Reilly]

Actually... I don't recall "begging" for anything. As a common stock holder, I would prefer they stay public in perpetuity. But if I'm sitting on the board, and I have half a clue as to what I'm managing, I'm thinking that the ridiculous scrutiny of Wall Street is holding back the company's growth. I'm also looking at an ever increasing stock pile of cash...

Company's go public so they can get access to capital. Apple no longer has such needs... the only reason they're accessing capital through debt is so they can become less of a public company.

Lastly, to suggest that Dell or Chrysler are analogous to Apple is just silly... Dell is struggling because their business model leaves them wide open to competitive pressures. Chrysler is struggling because their cars lack appeal and have for decades. Neither company has engendered any considerable brand loyalty. Apple is the antithesis of these examples.

The problem with your argument is that Wall Street "scrutiny" has no influence on Apple's actual business and certainly does not impede growth. What has impeded growth is increased competition in Apple's existing markets, and the lack of new products. Correcting that growth impediment is exactly what every investor wants, so I hardly see where your argument makes sense.

I'm not making an analogy to Chrysler or Dell. Far from it. In fact I am pointing out that most companies that exit public ownership do it because they are in some sort of crisis. (FWIW, Chrysler went private after they were spun off from the massively unwise merger with Daimler.) Chrysler is actually doing reasonably well now, but they probably could not have made it through the crisis as a public company.

Another company looking at going private is Blackberry (formerly RiM). Again, a crisis. You'd be hard pressed to find a company going private that doesn't have some deep problems with their business that they can best address outside of the glare of public ownership. That's my point.

 

[egoistaxx9]

That won't work. It's the company's culture and management that needs changing in order to foster innovation (the strategy is largely ok). In large corporations the focus is on the core business, risk management and short term profit. This clashes with the requirements of an innovative culture (risk taking and short term losses). That's why ever larger corporations go outside and acquire small start-ups that do not suffer from these things.

It's a common evolution of companies that was already reported in the 50s and 60s. Changing Apple doesn't help. They are reliant on venturing, open innovation or acquisitions.

----------



How will you recognise that moment?

you have to take risks if you wanna gain something, look at the iphone, they aren't improving anything and that's why more and more people are switching to android, the android guys are always taking risks, they're always busy in making better internals, doing experiments.

 

[heutusops]

i wish i could get a job in apple that easily. but i do agree with this guy, apple deserves to be on $625 per share, maybe the "this year's busy fall" will bring it back to what it deserves.

 

[peterdevries]

you have to take risks if you wanna gain something, look at the iphone, they aren't improving anything and that's why more and more people are switching to android, the android guys are always taking risks, they're always busy in making better internals, doing experiments.

Android is developed by a consortium. It's basically open innovation, where Google uses the innovative power from a very large developer base. It's a good way to remain innovative and many organisations are following this model. E.g. GE holds open design competitions for jet engine brackets.

Another way to innovate is to acquire start-ups or SME's with new technologies. People might say that this is not the same, but many large organisations do not have another choice. Apple needs to make a decision how it wants to continue. It seems their acquisition policy is not aggressive enough to sustain the demand of its customers and to remain in step with the market and their competitors.

You are right that risk appetite is necessary, but it is also a matter of culture. Corporations like Apple hope that the integration of new innovative companies helps transforming the culture, but the reality is that the innovative people often leave the company realising they don't fit.

A very good example of a company that hasn't been able to transform itself is Microsoft (I'm not a hater..). If Apple doesn't change its innovation strategy, culture and indeed appetite for risk, then it is likely that it will go the same route as Mirosoft and become a follower of the market.

 

[fallbrook]

The problem with your argument is that Wall Street "scrutiny" has no influence on Apple's actual business and certainly does not impede growth. What has impeded growth is increased competition in Apple's existing markets, and the lack of new products. Correcting that growth impediment is exactly what every investor wants, so I hardly see where your argument makes sense.

I'm not making an analogy to Chrysler or Dell. Far from it. In fact I am pointing out that most companies that exit public ownership do it because they are in some sort of crisis. (FWIW, Chrysler went private after they were spun off from the massively unwise merger with Daimler.) Chrysler is actually doing reasonably well now, but they probably could not have made it through the crisis as a public company.

Another company looking at going private is Blackberry (formerly RiM). Again, a crisis. You'd be hard pressed to find a company going private that doesn't have some deep problems with their business that they can best address outside of the glare of public ownership. That's my point.

First... Wall street absolutely influences what happens with Apple's growth. If those that listen to the news are fed all the non-sense reasons why Apple is "struggling"... their products are too expensive... there's too much competition... blah, blah, blah... that has a negative impact. My kids don't care... but my fellow Gen Xs are listening... as are my parents... and it absolutely impacts how they/we feel about Apple's product... the value proposition... whether they are willing to buy in.

Second... going private invariably involves more money than the company presently has. Thus said company must prove to its going private sponsors that they'll be able to repay whatever they borrow (as equity or debt), WITH a substantial return. So to paint the picture that LBO = looming disaster is ridiculous. I agree that crisis can be a part of the equation for many companies that contemplate LBOs... Dell is a great example of this. But unrecognized potential is even more so a part of the equation. IT SIMPLY HAS TO BE... No one is going to lend money that doesn't see a tremendous upside potential. And I think that Apple epitomizes the latter scenario.

Having said all that... they are still a few years away from an LBO being feasible. Even if they could throw all their cash at an LBO, you would still need an enormous syndicate of banks that has never ever been assembled before. However, as the quarters march on and Apple keeps stock piling cash, the tipping point will eventually be reached... Because the deal will be more attainable by Apple... smaller and less risky to banks with each passing quarter... assuming the stock remains depressed.

Don't get me wrong... I want to ride Apple to 3000... but unless Wall Street rethinks its calculus none of us will have that chance.

 

[bnnentertainmen]

i hope he's able to convince apple to stop selling the same thing in different packaging and start experimenting, start exploring, start innovating, start taking risks. waiting for a completely redesigned iphone.

 

[Klosefabrinio]

Something tells me that he already is a billionaire...

richest guy on earth?

 

[IJ Reilly]

First... Wall street absolutely influences what happens with Apple's growth. If those that listen to the news are fed all the non-sense reasons why Apple is "struggling"... their products are too expensive... there's too much competition... blah, blah, blah... that has a negative impact. My kids don't care... but my fellow Gen Xs are listening... as are my parents... and it absolutely impacts how they/we feel about Apple's product... the value proposition... whether they are willing to buy in.

Second... going private invariably involves more money than the company presently has. Thus said company must prove to its going private sponsors that they'll be able to repay whatever they borrow (as equity or debt), WITH a substantial return. So to paint the picture that LBO = looming disaster is ridiculous. I agree that crisis can be a part of the equation for many companies that contemplate LBOs... Dell is a great example of this. But unrecognized potential is even more so a part of the equation. IT SIMPLY HAS TO BE... No one is going to lend money that doesn't see a tremendous upside potential. And I think that Apple epitomizes the latter scenario.

Having said all that... they are still a few years away from an LBO being feasible. Even if they could throw all their cash at an LBO, you would still need an enormous syndicate of banks that has never ever been assembled before. However, as the quarters march on and Apple keeps stock piling cash, the tipping point will eventually be reached... Because the deal will be more attainable by Apple... smaller and less risky to banks with each passing quarter... assuming the stock remains depressed.

Don't get me wrong... I want to ride Apple to 3000... but unless Wall Street rethinks its calculus none of us will have that chance.

On the first part, I think you are just plain wrong. You are blaming Apple's declining earnings on the big amorphous Wall Street boogieman and neglecting the simple fact that they are facing a much more difficult competitive environment now. The only way Apple can turn that around is to wow the public with great new products. You know, the way they did it before? Nothing mysterious here, nothing that requires them to escape the terrible maw of Wall Street. (If that's the answer, then I wonder what is the question?)

I didn't mention the LBO scenario, so I can't be accused of painting a looming disaster picture. Not that going private would not mean a huge amount of borrowing, because it would -- huge, as in, of a scale never seen before. Good, bad, or otherwise, what this really does is change the makeup of Apple's corporate masters from shareholders to a debt holders. The holders of the debt tend to be investment bankers who mysteriously enough are also looking for a return on investment. No matter what you say, this is a course of action most suited to companies in crisis, which is why it is used so seldom for any other reason.

All of Apple's "unrecognized potential" is in the products they have yet to release. Playing finance games won't get them anywhere that releasing great new products will.

 

[Braniff747SP]

Icahn? Never been a fan, considering what happened with TW and Karabu...

 

[Zellio]

The board questions Tim Cook's performance and suddenly Icahn, who wanted management change in 2009, buys alot of shares.

You've have to be a complete moron to not see what is going on.

 

[rjohnstone]

The board questions Tim Cook's performance and suddenly Icahn, who wanted management change in 2009, buys alot of shares.

You've have to be a complete moron to not see what is going on.

iCahn is already demanding Apple increase returns to investors through buybacks.
Looking at all the companies that have done this over the past 5 years, only one, Qualcomm, has actually come out ahead.
Dell, HP, Intel and Ti have all lost more money than they invested after their buybacks were instituted.
It's very risky.
Cook wants to buyback $60 billion in shares through 2015 where iCahn wants Apple to buyback $150 billion and do it through loans, not through using their existing cash pool.
Again... risky.

Very rarely to buybacks result in long term gains either. They are generally short lived.

 

[egoistaxx9]

Android is developed by a consortium. It's basically open innovation, where Google uses the innovative power from a very large developer base. It's a good way to remain innovative and many organisations are following this model. E.g. GE holds open design competitions for jet engine brackets.

Another way to innovate is to acquire start-ups or SME's with new technologies. People might say that this is not the same, but many large organisations do not have another choice. Apple needs to make a decision how it wants to continue. It seems their acquisition policy is not aggressive enough to sustain the demand of its customers and to remain in step with the market and their competitors.

You are right that risk appetite is necessary, but it is also a matter of culture. Corporations like Apple hope that the integration of new innovative companies helps transforming the culture, but the reality is that the innovative people often leave the company realising they don't fit.

A very good example of a company that hasn't been able to transform itself is Microsoft (I'm not a hater..). If Apple doesn't change its innovation strategy, culture and indeed appetite for risk, then it is likely that it will go the same route as Mirosoft and become a follower of the market.

totally agreed, apple needs to increase their "pace of innovation", they need to take risks more often, or if they dont want to take risks atleast they can do what other companies have done and have been successful in it, for example, most people consider 4.7-4.8 inch a perfect size for smatphones, why cant apple bring out a 4.7 inch iphone? they dont wanna take risks, fine, atleast stay with the competition, dont lag behind

 

[simonmet]

What a dick. The guy sounds like a complete psychopath. I'm surprised and disappointed Tim Cook would even give him the time of day (or evening as the case may be). You never heard of Steve Jobs meeting investors like this?

Oh and as for his "compete in the low end/rubbish segment" push, I just read a great counter to this argument by Ken Rockwell which he titles "The best costs less" and he finishes up by saying "When you're buying something that you'll use over time, quality is always more important than price. Too many people can't think more than a year ahead, so they're always years behind."

The difference between Apple and most companies that want to make a quick buck is that Apple have some principles and aren't just about pushing $hlt products onto their customers in full knowledge that they're going to be in landfill soon enough just so they can sell them more $hlt.